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6 Tax Credits Small Business Owners Often Miss

Posted In:  small business  taxes

High tax bills are a common lament of small business owners. Yet, there are a number of tax credits that can help off-set that obligation that many small business owners never claim. Here are six of the most overlooked tax credits that can help your business reduce its tax obligation. 

Healthcare Tax Credit

This tax credit was put in place to encourage employers to provide health insurance for their employees by rewarding them with a tax credit to do so. As part of a benefits package, many employers pay a significant portion of the premium for healthcare. This credit allows small business owners to take up to 35% of what they paid out in health care expenses off of their tax bill. To claim this credit, you must pay over half of the cost of premiums for your employees. Your business can't employ more than fifty full time workers. Also, their average salary cannot be more than $50,000 per year. 

Work Opportunity Credit

If you have hired workers that fall into certain categories, you may be eligible for the Work Opportunity Credit. This credit is given to small businesses that hire employees that collect TANF for at least 9 out of the past 18 months, are veterans, receive SNAP benefits, residents of specific communities, ex-felons, SSI recipients, vocational rehab referrals, or summer youth workers. You simply need to certify new hires that fall into one of the above categories. Then, you can claim a credit on your taxes that equals up to 25% of their wages. 

Hiring Incentives to Restore Employment (HIRE) Act 

This tax credit allows you to claim up 6.2% of the wages paid to the employee over a 52 week period if you hire previously unemployed workers. The maximum value of this credit is $1000 per employee to which it applies. 

Research & Experimentation Tax Credit

If you have invested in your business and put resources into developing new methods or technology, the IRS is willing to pay you for it. The Research & Experimentation Tax Credit allows businesses to claim up to 20% of their qualified research expenditures as a credit to off-set their tax obligation. Research expenditures must fall under certain categories to qualify. 

Energy Efficiency Credits

Depending on the nature of your business, you could qualify for tax credits for energy efficiency. Home builders can claim a credit of up to $2000 for building homes that save 50% on energy costs for heating and cooling. Manufacturers are eligible for credits if they make energy efficient appliances. Commercial building owners can also qualify for credits if they maintain energy efficient buildings. 

Disabled Access Credit

If you have made changes to your business in order to make it more accessible to the disabled, whether they are customers or workers, your business may qualify for the credit as long as the business earned less than a million dollars and employ fewer than thirty workers. 

Tax obligations can seem steep for small business, but claiming whatever credits that you qualify for can make that tax bill a little easier to bear and prevent it from breaking your small business. 

Jessica Bosari is a freelance writer and blogger for various publications and her own blog. You can read more of Jessica's work here. If you have any comments or questions about or about saving money, leave your comments in the form below or email Thanks!


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